Uninor?s Norwegian parent Telenor is reportedly planning to buy a majority stake in Videocon Telecom. The deal is being seen as having value for both Videocon and Telenor as the former wants to exit the business and the latter wants to expand its presence in the Indian market. The deal is also being viewed as compliant with the merger and acquisition guidelines as both companies are small and have liberalised spectrum. However, the Rs 5 billion liability that Videocon has towards the government remains a major road block.
Videocon is reportedly seeking am enterprise valuation of Rs 100 billion on the grounds that it has 10 million customers, 5 MHz of liberalised and contiguous airwaves in six growth markets, as well as strong sales and distribution network across the country. However, analysts are of the view that the expected valuation is on the higher side since the quality of Videocon’s mobile customers can’t be compared with those of the leading operators.
